US personal spending to post a modest gain

After two sequential declines, personal consumption expenditures likely increased by 0.3% mom in February.

Societe Generale forecasts  for a modest increase reflects a tug of war between disappointing retail activity during the reference period, balanced by higher spending at gasoline stations and by stronger demand for utilities driven by unusually low temperatures.

"After adjusting for inflation, real PCE likely increased by 0.2% mom. Our forecast would putreal expenditures during the Jan-Feb span 2.3% annualized above the Q4 average. In order tohit our 3.2% published forecast for Q2 PCE, real spending would have to increase by 0.6%mom in March", says Societe Generale.

While ambitious, this is not unrealistic given the strong labor market backdrop and the added boost to real disposable income from lower energy prices which has yet to be spent.

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